Although he credited the Buddha with the doctrine of the Two Truths (it is mentioned in the early suttas and in a few commentaries to the Abhidharma), it was really Nagarjuna who developed this concept of two levels of truth.

Why are the Two Truths important? A primary cause for suffering is that we do not see reality as it truly is, and by reality, we mean first and foremost the reality of our everyday world, the realm of appearance and experience we inhabit. Although doctrinal discussions of the Two Truths may be wrapped around such subjects as being and non-being, the actual focus, as far as we are concerned, is on daily life.

Our basic tendency is to hold onto “things” (dharmas) as though they were real and endowed with some sort of self-nature. It might be the sense of self, or some other person, possessions, our preferences or prejudices. Buddhism teaches that when we seize upon these things and cling to them, we invite suffering into our lives. This point alone could be dealt with in depth, but for now it is suffice to say that the Two Truths are a tool to help us understand the actual nature of “things” and end the confusion that causes seizing and clinging, and gives rise to suffering.

In Fundamental Verses on the Middle Way, Nagarjuna says,

The Buddha’s dharma is based on two truths: the relative or conventional truth and the ultimate truth. Those who do not understand the relationship between the two do not understand the profound point of the Buddha’s teachings.”

It is very important to understand that the Two Truths do not posit two separate realities (the world and some other “ultimate” reality), rather, this concept deals with how we perceive reality and the “things” in it. The first kind of truth that we call relative, conventional, mundane, worldly, veiled, and so on is valid for the practical affairs of daily life. However, our perception of the everyday world is often based on the mis-perception that “things” have an existence or self-nature independent from other things. From the view of the ultimate truth, all things are produced by causes and conditions, and are thereby interdependent, and without self-nature. So, in this way, they are said to be impermanent and “unreal.”

In Nagarjuna’s logic, if there is no self-nature, then it follows that there is no “other-nature” as well. And, as he says in the Middle Verses,

Further, how can a thing exist without either self-nature or other-nature. Existing things can only be maintained when there is self-nature and other-nature.”

David Kalupahana, in Nagarjuna, The Philosophy of the Middle Way, notes, “It is not merely self-nature and other-nature that are rejected, but also existence and non-existence.” About this, Nagarjuna says,

Those who perceive self-nature and other-nature, as well as existence and non-existence, do not understand the truth of the Buddha’s teaching.”

First, Nagarjuna show us that there are two ways of perceiving the world. In terms of the conventional truth, things exist – they are real. In terms of the ultimate truth, they are unreal. Not only are they unreal, but Nagarjuna systematically removes the foundations on which we perceive them, and as well, any basis upon which we can seize and cling.

Nagarjuna rejects the perception of existing and non-existing things,and he also rejects all views, concepts, designations, modes of thought – all things (dharmas) are null and void. Things do not exist by themselves, from their own side. Yet, as Karl Jaspers writes in his essay on Nagarjuna,

[At] the same time, they are not nothing. They are midway between being and nonbeing, but they are empty. There is no dharma that has come into being independently, hence all dharmas are empty.”

They are empty of self-nature. But, while emptiness may be the ultimate nature of things, it is not the ultimate truth. Nagarjuna understands emptiness to be another “view,” another thought construction. The ultimate truth is not any view. In the ultimate truth, all views dissolve into silence. So, in the end, Nagarjuna rejects emptiness itself: sunyata-sunyata – the emptiness of emptiness.

Because we seem to be hard-wired to look at things dualistically, there are those who mistake the Two Truths to be separate.

Nagarjuna says,

The ultimate truth cannot be taught except in the context of the conventional truth, and unless the ultimate truth is comprehended, liberation is not possible.”

In other words, we use the relative to convey the ultimate, and we use the ultimate to understand the relative. Here we should see that the point is not so much that in this sense the relative is false, it’s more about being be able to skillfully use knowledge of the ultimate in order to understand the relative world, and to able to live more fully in it, without clinging to either truth. The trick is to know when the ultimate applies and when it does not.

While there are certainly distinctions between the relative and the ultimate, in the end, there is just one truth, one reality. The relative and the ultimate are but two sides of the same coin.

It is within nirvana that liberation from suffering is obtained, so nirvana is one of many terms used to express the ultimate. Nagarjuna makes clear, though, that there is no separation between the ultimate truth of nirvana and the conventional world:

Whatever is the extreme of nirvana is also the extreme of conventional existence. There is not the slightest bit of difference between the two.

Conventional existence is represented as the world of samsara – the world of suffering, misperception, of seizing and clinging. But we say, “Samsara is nirvana.” When there is a difference between the two, it is a matter of perception, or perhaps we should say an error of perception, because it makes no sense take a principle that points to the non-dual nature of reality and then look at it dualistically.

So that is a kind of brief overview of the subject, and I certainly don’t offer it as any kind of final word. It’s just my take, as far as my understanding goes.